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By Barry S. Cohen

Industry data suggests that the largest members of Big Pharma have provided tepid returns to shareholders and that this is likely to continue into the future. Many of these companies have simply become too unwieldy and their awkward size is being reflected in diminished R&D productivity.

So why would a company like Bristol-Myers Squibb (BMY) be on the acquisition trail, looking to get bigger. Wouldn't the New York City-based pharmaceutical company be better off trying to get "better" than bigger?

In view of the seemingly inverse relationship between size and productivity, perhaps Bristol would be smarter to stop lusting after the likes of Biogen Idec (BIIB) and Shire (SHPG), as has been rumored. Leave those targets for AstraZeneca (AZN). Bristol would probably be better off concentrating on getting its own house in order, complementing its portfolio by finding drugs for congestive heart failure and fibrosis. What path is Bristol likely to take? We have conducted analysis about the next move in the stock price, but the decisions of the company is another story.

That Bristol has to do something is clear. Like many of its pharmaceutical brethren, it's been hit hard by the dreaded disease known as "patent expiration-itis." Sales of the company's blockbuster drug Plavix, used to prevent blood clots after a heart attack or stroke, have dropped about $4.5 billion since Bristol lost market exclusivity last year. Sales are likely to decline further as more national patents related to the drug expire in the EU region during 2013. What's more, the company also has other drugs coming off patent soon, including Baraclude ($1.4 billion in sales) this year and Abilify ($2.8 billion) and Sustiva ($1.5 billion) in 2015.

That's a huge chunk of change at risk for a company with just under $18 billion in 2012 revenue. Some in the industry have suggested that Bristol just throw in the towel and succumb to a suitor like Johnson & Johnson (JNJ), which has a market cap north of $217 billion.

It's unlikely that option will be discussed Tuesday, March 12, when Michael Giordano, senior vice president and head of Development, Oncology & Immunology, will make a formal presentation about the company at 9:30 a.m. ET at Barclays 2013 Global Health Care Conference in Miami. Giordano is much more likely to focus on the positives for the company, and there are several, including the approval of Eliquis, which the company developed in conjunction with Pfizer (PFE). It would be a boon for Bristol if Eliquis, for atrial fibrillation, achieved blockbuster status, not only for the profits it would generate but also $750 million in milestone payments if it's successful.

Bristol and AstraZeneca also managed to get the type 2 diabetes treatment Forxiga approved for use in Europe. The companies plan to resubmit an application to the U.S. FDA sometime later this year.

Source: Bristol-Myers Should Concentrate On Getting Better, Not Bigger